SEC Warns Investors on Crypto Wallet and Custody Risks
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SEC releases detailed investor guidance on crypto wallets, custody risks, and key safeguards as retail participation expands rapidly. The US Securities and Exchange Commission has published a detailed investor guide on crypto wallet and custody risks. The goal of the bulletin is to enhance investor awareness while there is increased participation in retail. Further, officials emphasized the importance of custody decisions on asset security. Therefore, the agency encouraged investors to learn about wallets, private keys, and custody models. SEC Explains Crypto Custody and Wallet Mechanics According to the SEC, crypto asset custody is the question of how investors store and access digital assets. Generally, access is made via crypto wallets. However, wallets do not store assets themselves. Instead, they store private keys that authorize transactions. As a result, key loss can result in permanent asset loss. Curious about crypto wallets and how to store and access crypto assets? Check out our Crypto Asset Custody Basics Investor Bulletin.https://t.co/x4HMYMHLAe pic.twitter.com/bSbP25nzOc — U.S. Securities and Exchange Commission (@SECGov) December 13, 2025 The guide defines crypto assets in general. These include tokens, coins, and virtual currencies that are issued based on blockchain networks. Importantly, the SEC pointed out that there is a lot of variability in asset designs. Therefore, risks and benefits vary from network to network and use case to use case. Related Reading: Australia’s Securities Regulator Eases Crackdown On Stablecoins | Live Bitcoin News When creating wallets, two keys are created. First, there is a private key used to authorize transactions. It is like a password and cannot be replaced. Second, a public key allows others to send assets. Together, these keys determine the rights of ownership. The bulletin also makes the difference between hot and cold wallets. Hot wallets communicate with the internet using apps or browsers. As a result, they…
